Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No

As of November 1, 2002, 17,031,687 shares of Common Stock, 1,046,716 shares of Series I Preferred Stock and 10,984,971 shares of Series J Preferred Stock were outstanding.

Item 1 - Financial Statements

    Condensed Consolidated Balance Sheets at September 30, 2002 (unaudited) and

        December 31, 2001                                                                                                                 3

    Condensed Consolidated Statements of Operations for the Three and Nine Months Ended

        September 30, 2002 and 2001(unaudited)                                                                                4

    Condensed Consolidated Statements of Cash Flows for the Nine Months Ended

        September 30, 2002 and 2001(unaudited)                                                                                5

    Notes to Condensed Consolidated Financial Statements (unaudited)                                              6

Item 2 - Management's Discussion and Analysis of Financial Condition

and Results of Operations                                                                                                                 12

Item 3 - Quantitative and Qualitative Disclosures about Market Risk                                                  15

Item 4 - Controls and Procedures                                                                                                     16

Item 6 - Exhibits and Reports on Form 8-K                                                                                     17

Signatures                                                                                                                                       18

Certifications                                                                                                                                   19

Exhibit Index                                                                                                                                   21

The accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

The pro forma financial data set forth below, which is unaudited, should be read in conjunction with the Consolidated Financial Statements and related notes included in Aristotle's Proxy Statement - Prospectus dated May 15, 2002, Annual Report on Form 10-K for the year ended June 30, 2001, quarterly report on Form 10-Q for the quarter ended June 30, 2002 and this quarterly report on Form 10-Q. The pro forma financial data is provided for informational purposes only, should not be construed to be indicative of Aristotle's financial condition or results of operations had the Merger been consummated on the dates assumed, and is not intended to project Aristotle's financial condition on any future date or results of operations for any future period.

Operating results for the three and nine months ended September 30, 2002 and 2001, respectively, on a pro forma basis as though Aristotle was acquired by Nasco on January 1, 2001, are summarized below.

3. Recent Accounting Pronouncements

The Company adopted the provisions of Statement of Financial Accounting Standards No. 141, Business Combinations ("SFAS 141") as of July 1, 2001. SFAS 141 requires that the purchase method of accounting be used for all business combinations. SFAS 141 specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported separately from goodwill. The Company adopted the provisions of SFAS No. 142, Goodwill and Other Intangible Assets ("SFAS 142") effective January 1, 2002. Under SFAS 142, goodwill is no longer subject to amortization over its estimated useful life. Instead, SFAS 142 requires that goodwill be evaluated at least annually for impairment by applying a fair value based test and, if impairment occurs, the amount of impaired goodwill must be written off immediately. The Company evaluated its goodwill at September 30, 2002, and determined that no impairment of goodwill existed.

For the three and nine months ended September 30, 2002 and 2001, a reconciliation of reported net earnings to adjusted net earnings before amortization of goodwill is as follows (in thousands, except per share data):

In August 2001, the Financial Accounting Standards Board issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-lived Assets ("SFAS 144"). SFAS 144 modifies the rules for accounting for the impairment or disposal of long-lived assets. Aristotle adopted SFAS 144 on January 1, 2002. The impact of the adoption of SFAS 144 did not have a material impact on Aristotle's consolidated financial statements.

SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13 and Technical Corrections ("SFAS 145") updates, clarifies and simplifies several existing accounting pronouncements. Among other things, SFAS 145 eliminates the requirement to aggregate gains and losses from early extinguishments of debt and, if material, to classify these as an extraordinary item, net of related income tax effect. SFAS 145 is not expected to have a material impact on Aristotle's consolidated financial statements.

SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities ("SFAS 146") requires that a liability be recognized for these costs only when incurred, while existing practice calls for recognition of a liability when an entity commits to an exit plan. SFAS 146 is effective for exit or disposal activities initiated after December 31, 2002 and is not expected to have a material impact on Aristotle's consolidated financial statements.

4. Accounting for Stock-Based Compensation

In June 2002, the Company adopted a change in accounting principles to adopt SFAS No.123, Accounting for Stock-Based Compensation ("SFAS 123"), which requires the fair value of stock options granted to employees to be measured at the date of grant and recognized as expense over the service period, which is usually the vesting period of the grant. Under SFAS 123, the Company recognizes the fair value of stock options granted on or after January 1, 2002 as an expense on its income statement. The total fair value of the 50,000 options issued during the three-month period ended September 30, 2002 is $.09 million. The total fair value of the 940,100 options issued during the nine months ended September 30, 2002 is $1.53 million. The total fair value of the options granted by Aristotle is being recognized as compensation expense over the 3-year vesting period for such options. The change in accounting reduced net income for the third quarter and the first nine months of 2002 by approximately $.07 million and $.08 million, respectively. The expected annual impact on net income of the options granted in the nine months ended September 30, 2002 is a reduction of approximately $.3 million.

5. Earnings per Common Share

                                                                                                                                  Income                 Shares                     Per Share

                                                                                                                             (Numerator)       (Denominator)               Amount

Basic EPS:

Income before extraordinary gain                                                                      $ 2,565                 17,031,687                         $ .15

Extraordinary gain                                                                                                         --                 17,031,687                               --

Net income                                                                                                            $ 2,565                 17,031,687                          $ .15

Diluted EPS:

Income before extraordinary gain                                                                     $ 2,565                  17,139,708*                        $ .15

Extraordinary gain                                                                                                         --                  17,139,708*                             --

Net income                                                                                                            $ 2,565                  17,139,708*                        $ .15

* Includes the dilutive effect of 928,609 employee stock options, computed under the treasury stock method.

Basic and diluted EPS                                                                                           $ 4,342                 15,000,000                         $ .29

Basic EPS:

Income before extraordinary gain                                                                       $ 6,537                 15,788,860                         $ .41

Extraordinary gain                                                                                                  20,237                 15,788,860                          1.28

Net income                                                                                                           $ 26,774                  15,788,860                       $ 1.69

Diluted EPS:

Income before extraordinary gain                                                                       $ 6,537                 15,915,255*                        $ .41

Extraordinary gain                                                                                                  20,237                 15,915,255*                         1.27

Net income                                                                                                           $ 26,774                 15,915,255*                       $ 1.68

* Includes the dilutive effect of 928,609 employee stock options, computed under the treasury stock method.

Basic and diluted EPS                                                                                         $ 7,276                 15,000,000                             $ .49

Total comprehensive income represents net income plus changes in equity that result from transactions and economic events from non-owner sources. Comprehensive income for the three and nine months ended September 30, 2002 and 2001, respectively, is as follows (in thousands):

                                                                                                                                         Three Months Ended              Nine Months Ended

7. Segment Reporting

Aristotle's business activities are organized into two principal business segments, Educational and Commercial. The Educational segment markets instructional teaching aids and materials to educational institutions nationwide, primarily K-12 classes. The primary marketing tool is catalogs containing a selection of over 80,000 items. The catalogs carry the branding of Nasco, Triarco, Summitt Learning, Hubbard Scientific, Scott Resources and Spectrum Educational Supplies. In addition, Aristotle, through Nasco and Simulaids, offers simulation kits and manikins used for training in cardiopulmonary resuscitation, and the fire and emergency rescue and patient care fields. The primary potential for this segment to grow is directly related to school enrollments and the relative strength of government funding of education. The Commercial segment is comprised of several commercial industries, including agriculture, food, sterile sampling containers and systems, senior care activities, and novelty and gift products. This segment markets its products through catalog distribution nationwide and through a worldwide dealer network representing more than 60 countries. Market growth in this segment is related to the general economic conditions of world agriculture, the increasing size of the aged population, and the increasing global awareness of food and water quality standards. Aristotle evaluates the performance of these segments based on segment sales and gross profit.

The following table presents segment information for the three and nine months ended September 30, 2002 and 2001 (in thousands):

We believe the following accounting policies affect the more significant judgments and estimates used in the preparation of the Condensed Consolidated Financial Statements.

Revenues - Customarily applying FOB-shipping point terms, Aristotle recognizes revenue upon shipment of products to its customer, which corresponds to the time when risk of ownership transfers. The point of shipment may be from one of Aristotle's distribution centers or from a vendor's location as a drop shipment. All drop shipment sales are recorded at gross selling price. An allowance is provided for estimated future returns.

Goodwill - Aristotle adopted SFAS 141 as of July 1, 2001. SFAS 141 requires that the purchase method of accounting be used for all business combinations. SFAS 141 specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported separately from goodwill. Aristotle also adopted the provisions of SFAS 142, effective January 1, 2002. Under SFAS 142, goodwill is no longer subject to amortization over its estimated useful life. Instead, SFAS 142 requires that goodwill be evaluated at least annually for impairment by applying a fair value based test and, if impairment occurs, the amount of impaired goodwill must be written off immediately. Aristotle has evaluated its goodwill and determined that there has been no impairment of goodwill.

Taxes - The September 30, 2002 balance sheet contains a deferred tax asset of approximately $28.4 million related to Aristotle's federal net operating tax loss carryforwards. This asset is expected to be utilized to offset future federal taxable income through 2006 and a portion of 2007. The realizability of this asset is dependent upon projected future operating results and Aristotle's ability to retain its federal net operating tax loss carryforward position. The asset at September 30, 2002 is net of a valuation allowance of approximately $12 million, which is subject to future adjustment based upon changes in management's evaluation of the realizability of the deferred tax asset.

Gross profit for the three months ended September 30, 2002 increased 5.4% to $19.3 million from $18.3 million for the prior year. The gross profit margin percentage improved to 34.8% in the third quarter of 2002 compared to the prior year gross profit margin of 34.7%. The Educational segment yielded a gross profit margin of 38.2% in the third quarter of 2002, improving on the 2001 gross profit margin of 37.3%. The Commercial segment gross profit margin was 35.5% compared to 35.2% for the third quarter of 2001. Building upon efforts initiated in the first six months of 2002, the Company improved its third quarter gross profit margins through purchasing efforts to reduce merchandise costs.

Selling, general and administrative expenses for the quarter ended September 30, 2002 increased 5.7% to $11.1 million from $10.5 million in the same period last year. Simulaids' operations incurred $0.3 million in selling, general and administrative expenses in the third quarter of 2002 compared to none in the same period of 2001. Additionally, selling, general and administrative expenses in the third quarter of 2002 contained approximately $.4 million in expenses related to payments due in connection with previously announced management changes. No such expenses occurred in the comparable period of 2001.

In addition, in the three months ended September 30, 2001, selling, general and administrative expenses included goodwill amortization of $.092 million. As discussed above, effective January 1, 2002, Aristotle adopted SFAS 142 and no longer amortizes goodwill as a reduction to earnings from operations.

During the third quarter of 2001, and not recurring in 2002, AMEP incurred certain costs classified as special charges in the accompanying Condensed Consolidated Statements of Operations. These non-recurring costs include a $.062 million adjustment to accruals for various legal, accounting and regulatory fees in connection with Nasco's acquisition of AMEP.

Interest expense decreased 40% to $0.5 million in the three months ended September 30, 2002 compared to $0.8 million in the prior year period. The decrease reflects the variance in interest rates in effect and reduced debt levels in the 2002 period compared to 2001. The applicable interest rates assessed under Aristotle's various credit agreements averaged 4.2% in the third quarter of 2002 compared to 5.9% in the third quarter of 2001. The applicable interest rate for the long-term debt has been fixed at rates that average 3.7% through October 2002. The principal balance outstanding under these credit agreements amounted to $40.7 million and $47.5 million at September 30, 2002 and 2001, respectively.

The income tax provision for the three months ended September 30, 2002 was $3.0 million compared to $2.8 million for the three months ended September 30, 2001. The difference between the Federal statutory income tax rate of 35% and the effective income tax rate results principally from state income taxes and Canadian provincial taxes. The balance sheet contains a deferred tax asset at September 30, 2002 of approximately $28.4 million related to Aristotle's federal net operating tax loss carryforwards. The Company's reported results are after federal and state income taxes, but it is anticipated that the utilization of the deferred tax asset to offset future federal taxable income will result in Aristotle not having to pay federal income taxes for approximately the next five years.

Preferred stock dividends of $2.2 million were accrued during the three months ended September 30, 2002. This amount represents dividends on 1,046,716 shares of Series I Preferred Stock and 10,984,971 shares of Series J Preferred Stock for the period July 1, 2002 to September 30, 2002, the date on which the preferred stock dividends were paid in cash. There was no preferred stock outstanding in the quarter ended September 30, 2001.

For the Nine Months Ended September 30, 2002 as compared to the Nine Months Ended September 30, 2001.

Net sales for the nine months ended September 30, 2002 increased 3.4% to $133.3 million compared to net sales of $129.0 million for the prior year. The growth in net sales is positively impacted by the acquisition of Spectrum completed in April 2001, and the inclusion of net sales of Simulaids from the Merger date. Spectrum has contributed $7.8 million in net sales in the first nine months of 2002, compared to $4.0 million from its acquisition date to September 30, 2001. Simulaids has contributed $2.3 million in net sales from the merger date through September 30, 2002. Excluding the net sales from Spectrum and Simulaids, net sales declined 1.4% in the nine months of 2002 compared to the same period of 2001. Net sales in the Educational segment, totaling $112.3 million, increased 5.1% in the first nine months of 2002 compared to 2001. Excluding the sales realized from Spectrum and Simulaids, the Educational segment sales decreased 0.7% from 2001. The Commercial segment recorded net sales of $22.6 million in the first nine months of 2002, decreasing 2.0% versus the prior year. The lack of growth in year to date sales reflects the downturn in the U.S. economy as well as budgetary uncertainty in the U.S. education sector.

Gross profit for the nine months ended September 30, 2002 increased 5.7% to $46.9 million from $44.4 million in the same period last year. The gross profit margin percentage improved to 35.2% in the first nine months of 2002 compared to the prior year gross profit margin of 34.4%. Spectrum produced $2.9 million in gross profit in the first nine months of 2002, compared to $1.5 million in the first nine months of 2001. Simulaids provided $1.4 million in gross profit in the nine months of 2002, compared to none in 2001. Excluding the gross profit realized from Spectrum and Simulaids, the gross profit margin would be 34.6% for the nine months ended September 30, 2002, compared to 34.3% for the same period last year. The Educational segment yielded a gross profit margin of 38.7% in the nine months of 2002, improving on the 2001 gross profit margin of 37.5%. Excluding the gross profit from Spectrum and Simulaids, the 2002 Educational segment gross profit margin would be 38.3%, compared to 36.2% in 2001. The Commercial segment gross profit margin was 36.2% compared to 35.1% for the first nine months of 2001. In general, Aristotle improved its gross profit margins for the first nine months of 2002 through purchasing efforts to reduce merchandise costs implemented throughout the period.

Selling, general and administrative expenses for the nine months ended September 30, 2002 were $30.6 million as compared to $29.7 million in 2001, increasing 3.0% compared to the same period last year. Excluding Spectrum and Simulaids, selling, general and administrative expense remained unchanged at $28.6 million. Additionally, selling, general and administrative expenses in 2002 contained approximately $.4 million in expenses related to payments due in connection with previously announced management changes. No such expenses occurred in the comparable period of 2001. Selling, general and administrative expenses at AMEP were reduced $1.8 million compared to the first nine months of 2001 through consolidation of distribution services and implementation of other operating efficiencies.

In the nine months ended September 30, 2001, selling, general and administrative expenses included goodwill amortization of $.3 million. As discussed above, effective January 1, 2002, Aristotle adopted SFAS 142 and no longer amortizes goodwill as a reduction to earnings from operations.

During the first nine months of 2001 and not recurring in 2002, AMEP incurred certain costs classified as special charges in the accompanying Condensed Consolidated Statements of Earnings. These non-recurring costs include $.5 million of various legal, accounting and regulatory fees incurred by AMEP in connection with Nasco's acquisition of AMEP. The special charges are reported as a reduction to earnings from operations.

Interest expense decreased 39.5% to $1.4 million in the nine months ended September 30, 2002 compared to $2.4 million in the prior period. The decrease reflects the variance of interest rates in effect and reduced debt levels in 2002 compared to 2001. The applicable interest rates assessed by Aristotle's various credit agreements averaged 4.3% in the first nine months of 2002, compared to 6.7% in the first nine months of 2001. The applicable interest rate for the long-term debt has been fixed at rates that average 3.7% through October 2002. The principal balance outstanding under these credit agreements amounted to $40.7 million and $47.5 million at September 30, 2002 and 2001, respectively.

The income tax provision for the nine months ended September 30, 2002 was $5.9 million compared to $4.6 million for the nine months ended September 30, 2001. The difference between the Federal statutory income tax rate of 35% and the effective income tax rate results principally from state income taxes and Canadian provincial taxes. The balance sheet contains a deferred tax asset at September 30, 2002 of approximately $28.4 million related to Aristotle's federal net operating tax loss carryforwards. The Company's reported results are after federal and state income taxes, but it is anticipated that the utilization of the deferred tax asset to offset future federal taxable income will result in Aristotle not having to pay federal income taxes for approximately the next five years.

Preferred stock dividends of $2.5 million were accrued during the nine months ended September 30, 2002. This amount represents dividends on 1,046,716 shares of Series I Preferred Stock and 10,984,971 shares of Series J Preferred Stock for the period June 17, 2002 to September 30, 2002, the date on which the preferred stock dividends were paid in cash. There was no preferred stock outstanding in the period ended September 30, 2001.

An extraordinary gain of $20.2 million was recognized during the nine months ended September 30, 2002, which represented the negative goodwill arising principally from the deferred tax benefits recognized at the date of the Merger.

At September 30, 2002, Aristotle had cash and cash equivalents of $8.3 million compared to $4.5 million at December 31, 2001. The overall increase in cash and cash equivalents of $3.8 million is detailed below.

Aristotle generated $5.8 million of cash from operations during the nine months ended September 30, 2002. During this period, Aristotle generated cash from earnings plus non-cash income and deductions of $8.8 million, an increase in prepaid expenses, primarily advertising costs of $1.0 million, an increase of $5.8 million in trade accounts payable, and an increase of $2.7 million in accrued expenses. Offsetting these items, trade accounts receivable increased by $9.9 million, and inventories increased by $3.0 million. These changes in current assets and liabilities are typical for this quarter as Aristotle has just completed its peak business cycle, which occurs during the summer months. Aristotle generated $1.6 million of cash from operations during the nine months ended September 30, 2001. During this period, Aristotle generated cash from earnings plus depreciation and amortization of $8.9 million, an increase in prepaid expenses, primarily advertising costs, of $0.9 million, an increase of $5.1 million in trade accounts payable, and an increase of $4.1 million in accrued expenses. Offsetting these items, trade accounts receivable increased by $11.8 million and inventories increased by $5.5 million. These changes in current assets and liabilities are typical for this quarter as Aristotle has just completed its peak business cycle, which occurs during the summer months.

Aristotle generated $2.5 million of cash from investing activities during the nine months ended September 30, 2002. Aristotle invested $1.1 million in capital expenditure purchases to replace and upgrade existing capital equipment and install new equipment and fixtures in order to provide additional operating capacity and efficiency. These expenditures were partially offset by the sale of $.3 million in marketable securities. As a result of the Merger, cash increased by $3.3 million. Aristotle used $11.3 million of cash in investing activities in the nine months ended September 30, 2001. The investing activity in the quarter ended September 30, 2001 included $5.2 million paid to the minority shareholders of AMEP for their ownership interests, and $5.0 million for the acquisition of the ownership interests in Spectrum. During that period, Aristotle invested $1.1 million in capital expenditure purchases to replace and upgrade existing capital equipment and install new equipment and fixtures in order to provide additional operating capacity and efficiency.

Aristotle anticipates that there will be sufficient financial resources to meet its projected working capital and other cash requirements for at least the next twelve months.

Aristotle management is currently considering the potential disposition of its 80% interest in Safe Passage, or the discontinuance of additional support of the operations of Safe Passage. There is no certainty that any such transaction or action will be effectuated or, if so, in what time period. Since the date of the Merger through September 30, 2002, Safe Passage had revenues of $.05 million and a net loss of $.3 million.

As described below, credit risk and interest rate risk are the primary sources of market risk to Aristotle in its marketable securities and long-term borrowings.

Aristotle's marketable securities and long-term borrowings as of September 30, 2002 are as follows (in thousands, except percentage data):

                                                                                                                Maturity less                                                     Maturity greater

                                                                                                               than one year                                                         than one year

Marketable securities

    Cost basis                                                                                                 $ --                                                                          $ 534

    Weighted average return                                                                          --                                                                               6.1%

    Fair market value                                                                                      $ --                                                                           $ 549

Long-term borrowings

    Amount                                                                                                 $8,614                                                                     $32,105

    Weighted average interest rate                                                               3.7%                                                                         3.7%

    Fair market value                                                                                 $8,614                                                                     $32,105

Interest Rate Risk: Changes in interest rates can potentially impact Aristotle's profitability and its ability to realize assets and satisfy liabilities. Interest rate risk is resident primarily in Aristotle's marketable securities and long-term borrowings, which have fixed coupon or interest rates.

Credit Risk: Aristotle's marketable securities are invested in investment grade corporate bond funds and closed-end bond funds, both domestic and international, which have various maturities.

Aristotle's management, including its Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of disclosure controls and procedures pursuant to Rule 13a-14 of the Securities Exchange Act of 1934. Based on that evaluation, each of the Chief Executive Officer and the Chief Financial Officer has concluded that the disclosure controls and procedures are effective in ensuring that all material information required to be filed in this quarterly report has been made known to him in a timely fashion. There have been no significant changes in internal controls, or in factors that could significantly affect internal controls, subsequent to the date the Chief Executive Officer and Chief Financial Officer completed his evaluation.

                                                                  John J. Crawford

                                                                                                               Dean T. Johnson